U.S. to Allow Alaska-Hawaiian Merger to Proceed With Consumer Protections

Skift Take

The Alaska-Hawaiian merger cleared another major hurdle after receiving the green light from the DOT.

Meghna Maharishi

The Department of Transportation said Alaska Airlines and Hawaiian Airlines can begin the process of merging after it secured a set of consumer protections from the two carriers.

Some of these consumer protections include preserving the value of rewards, maintaining critical inter-island and continental routes, preserving support for essential air service in Alaska and Hawaii and ensuring competitive access at the Honolulu hub.

The department said that under these conditions, Alaska and Hawaiian can close their deal and “consummate the merger” but they must operate independently until the DOT has issued a ruling on their transfer application. The transfer application allows Alaska and Hawaiian to combine and operate international routes under one certificate, a DOT official said. Once the application is approved, the consumer protections will remain in effect for six years, the department said.

Alaska said it expects to consummate the merger with Hawaiian on September 18, according to a regulatory filing posted shortly after the DOT’s announcement.

Transportation Secretary Pete Buttigieg said in a call with reporters on Tuesday that this was the first time the department had secured “binding, enforceable protections as a precondition” to merging.

Consumer Protections on a Combined Loyalty Program

In regards to loyalty programs, the DOT said Alaska and Hawaiian agreed to enact protections against devaluations if the merger is approved. Alaska CEO Ben Minicucci previously said he envisioned a combined airline operating a loyalty program similar to that of Marriott Bonvoy — two brands under one frequent flyer program.

“Travelers care a lot about our frequent flyer miles, and that’s why we secured the first ever rewards program protections that prevent the combined airline from devaluing or taking away the miles, status, or benefits that consumers have earned,” Buttigieg said in the call.

Miles earned from Alaska Mileage Plan and HawaiianMiles wouldn’t expire under a combined loyalty program. Members of each rewards program would also be able to transfer miles at a 1:1 ratio before the launch of a combined frequent flier program, so members can have the same number of miles if the merger is approved.

The DOT also said that a combined airline would need to match and maintain the equivalent status levels that members of Hawaiian’s and Alaska’s loyalty program currently hold. The combined airline also can’t impose new change or cancellation fees for rewards tickets.

Other requirements for the merger include mandating Hawaiian to join Alaska in offering a travel credit or frequent flyer miles when a flight is delayed or canceled due to a circumstance within the airline’s control. The two carriers also have to lower costs for members of the military and their families.